Comment: New EB5 Reg

Immigration Daily has learned that intense pressure is being brought by EB5 industry players on the White House to delay USCIS's new EB5 regulation. To understand what will come of this pressure during the coming week or two, it is necessary to set forth some background below.

Just before Christmas 2017, OIRA made an announcement re the new EB5 regs. OIRA describes itself on its website thusly: "The Office of Information and Regulatory Affairs (OIRA) is a statutory part of the Office of Management and Budget within the Executive Office of the President. OIRA is the United States Government’s central authority for the review of Executive Branch regulations [...]". The announcement preponed USCIS's new EB5 regulations from April 2018 to February 2018. These new regulations have been proposed to (i) increase EB5 investment amounts, (ii) centralize TEA designations at USCIS, and away from states/localities, (iii) permit I-526 portability and (iv) make a few technical changes. USCIS is better known for delaying regulations, not speeding them up, hence this preponement was noteworthy. Still more noteworthy is the fact that this EB5 regulation may be the only Obama-era rule-making being continued by the Trump Administration. The questions naturally are why was the rule making preponed and why was the rule making continued.

Current USCIS Director Francis Cisna was until recently detailed to the staff of the Senate Judiciary Committee where he worked under the direction of Republican Senator Grassley, the Committee's Chairman. Mr. Grassley has been publicly critical of EB5 program abuses, and his rural state of Iowa has suffered significant under-investment from EB5 investors, as has the rural state of Vermont, represented on the same Committee by Democratic Senator Leahy - this is what makes bed-fellows of Senators otherwise on opposite side of most issues - in other words, EB5 is that political rarity - a bipartisan issue. Instead, the real divide on EB5 is the urban-rural divide - with Senators like Grassley and Leahy on one side, and Senators like Schumer and Cornyn on another. Centralizing TEA designations at USCIS would likely put the kibosh on 80% of EB5 projects currently in the market, and would make it possible for rural states like Iowa and Vermont to receive EB5 investments. The US Senate is dominated by rural interests, and during Mr. Cisna's confirmation hearings last year he was specifically asked about the upcoming new EB5 regulation, and he indicated under oath that the rule making would continue. Mr. Cisna appears thus to be living up to his word.

However, an investment-stream of billions of dollars does not go gently into the night. Well-connected industry players recognize the dual threats to their business models - (a) stopping urban projects from getting an overwhelming percentage of investments would kill 80% of current EB5 projects and (b) increasing investment amounts to over $1million would likely stop 100% of projects, not just 80%, it might take months or years for the market to recover - these same well-connected industry players have been making the rounds of Capitol Hill and the Administration this month counseling restraint by USCIS on the upcoming new EB5 reg. As a practical matter, USCIS Directors are unlikely to overly bend to political pressure - however, they do take direction from their political masters at DHS and the White House. It would be relatively easy for OMB to conclude that the Paperwork Reduction Act analysis was not sufficiently expansive, or that a statistical table backing up one of USCIS's calculations needed updating - thus delaying the new EB5 reg by many weeks or months. However, since Mr. Cisna announced, sua sponte, preponement of rule making, the executive branch's actions would be under a microscope, as to the propriety of decision making under pressure of lobbyists, particularly since Jared Kushner, the President's son-in-law, reportedly has an EB5 project currently in the market for a capital raise.

There exists a simpler solution for Mr. Cisna, however. He could go ahead and promulgate the rule in the next week, but defer the effective date by 6 months, or even 12 months, thus giving room for a Congressional solution to be fashioned - in a way, he could have his cake and eat it too thereby. Since court challenges to the new regulation are likely, such extended deferment of the effective date would assist the judicial branch too, in giving predictability to the industry by resolving challenges well in advance of the effective date. We will all learn soon enough.

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Focus: EB-5 Roundtable with Angelo Paparelli

This month's free 45-minute telephonic EB5 Roundtable with Angelo Paparelli features:
Guest Speakers: Richard Kristof
This month's topic is: Investors in EB-5
Date: Tuesday, February 27, 2018 - Time: 2:00-2:30pm ET
Registration Deadline: 11:00pm (ET), Monday, February 26th, 2018
To register, please see:
To view speakers and their biographies, please see:

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Headline: What's next after the Senate's mmigration train wreck? Click here
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